MAS INTEGRATION

QUIZ NO. 1

1. Which of the following would not be considered a direct cost with respect to the service
department of a new car dealership?
A. Wages of repair techniques C. Repair parts consumed
B. Property taxes paid by the dealership D. Salary of the department manager

2. Indirect costs:
A. can be traced to a cost object.
B. cannot be traced to a particular cost object.
C. are not important.
D. may be indirect with respect to Disney World but direct with respect to one its major
components, Epcot Center.

3. The variable costs per unit are P4 when a company produces 10,000 units of product. What are
the variable costs per unit when 8,000 units are produced?
A. P4.00 B. P4.50 C. P5.00 D. P5.50

4. Baxter Company, which pays a 10% commission to its salespeople, reported sales revenues of
P210,000 for the period just ended. If fixed and variable sales expenses totaled P56,000,
what would these expenses total at sales of P168,000?
A. P16,800 B. P35,000 C. P44,800 D. P51,800

5. The tuition that will be paid next semester by a college student who pursues a degree is
a(n):
A. sunk cost D. average cost
B. out-of-pocket cost E. marginal cost
C. indirect cost

6. If the total cost of alternative A is P50,000 and the total cost of alternative B is P34,000,
then P16,000 is termed the:
A. opportunity cost D. out-of-pocket cost
B. average cost E. differential cost
C. sunk cost

Use the following to answer questions 7 and 8:

Wee Care is a nursery school for pre-kindergarten children. The school has determined that
the following biweekly revenues and costs occur at different levels of enrollment:

Number of
Students Enrolled Total Revenue Total Costs
10 P3,000 P2,100
15 4,500 2,700
16 4,800 2,800
20 6,000 3,200
21 6,300 3,255

7.The marginal cost when the twenty-first student enrolls in the school is:
A. P55 B. P155 C. P300 D. P3,045

8. The average cost per student when 16 students enroll in the school is:
A. P100 B. P125 C. P175 D. P300

9. The costs that follow all have applicability for a manufacturing enterprise. Which of the
choices listed correctly denotes the costs’ applicability for a service provider?
Period Cost Uncontrollable Cost Opportunity Cost
A. Applicable Applicable Not applicable
B. Applicable Not applicable Applicable
C. Applicable Applicable Applicable
D. Not applicable Applicable Applicable
E. Not applicable Applicable Not applicable
10. When graphed, a typical variable cost appears as:
A. a horizontal line
B. a vertical line
C. a u-shaped line
D. a diagonal line that slopes downward to the right
E. a diagonal line that slopes upward to the right

11. Each of Davidson's production managers (annual salary cost, $45,000) can oversee 60,000
machine hours of manufacturing activity. Thus, if the company has 50,000 hours of
manufacturing activity, one manager is needed; for 75,000 hours, two managers are needed; for
125,000 hours, three managers are needed; and so forth. Davidson's salary cost can best be
described as a:
A. variable cost D. fixed cost
B. semi-variable cost E. step-fixed cost
C. step-variable cost

12. Which of the following choices correctly classifies a committed fixed cost and a
discretionary fixed cost?
Committed Discretionary
A. Promotion Management salaries
B. Building depreciation Charitable contributions
C. Management training Property taxes
D. Equipment rentals Equipment depreciation
E. Research and development Advertising

13. Mohawk Products has determined that the number of machine hours worked (MH) drives the amount
of manufacturing overhead incurred (MOH). On the basis of this relationship, a staff analyst
has constructed the following regression equation:

MOH = 240,000 + 8MH

Which of the choices correctly depicts the nature of Mohawk's variables?

Dependent Independent
A. MOH MOH
B. MOH MH
C. MH MOH
D. MH MH
E. 8 240,000

14. Tempe, Inc., is studying marketing cost and sales volume, and has generated the following
information by use of a scatter diagram and a least-squares regression analysis:

ScatterDiagram Regression Analysis

Variable cost per unit sold P6.50 P6.80
Total monthly fixed cost P45,000 P42,500

Tempe is now preparing an estimate for monthly sales of 18,000 units. On the basis of the
data presented, compute the most accurate sales forecast possible.
A. P159,500 B. P162,000 C. P164,900 D. P167,400

15. A high R2 measure in regression analysis is preferred because:

A. it indicates a good fit of the regression line through the data points.
B. it shows that a great deal of the change in the dependent variable is explained by change
in the independent variable.
C. it means that the independent variable is a good predictor of the dependent variable.
D. it means that the cost analyst can be relatively confident in his or her cost
predictions.
E. all of the preceding statements are true.